University of Michigan reports slight improvement in U.S. consumer sentiment

WASHINGTON American consumers showed a slight improvement in sentiment this month as concerns about inflation eased, yet overall confidence remains weak. The preliminary reading of the University of Michigan's consumer sentiment index released on Friday reached 53.3, up from November's final figure of 51. This surpassed economists' expectation of 52 but is still far below the 71.7 recorded in January.

While consumers reported a small decline in their assessment of current economic conditions, their outlook for the future appeared somewhat more optimistic.

Expectations for inflation over the next year fell to 4.1% from 4.5% last month, marking the lowest level since January. Economists note that tariffs imposed on imports can push costs higher for consumers as importers often pass those expenses along. Recent trade negotiations with major partners such as the European Union and Japan have lowered some of the previously steep tariffs.

Nevertheless, the average U.S. tariff rate has risen from 2.4% in January to 16.8% last month, the highest since 1935, according to research from Yale University's Budget Lab.

Joanne Hsu, director of the Michigan economic surveys, remarked, Overall, the mood remains largely somber, as consumers continue to feel the strain of elevated prices. Despite some reduction since mid-2022, inflation continues to exceed the Federal Reserve's 2% target.

Author: Olivia Parker